20221201Nygard Direct with Exhibits.PDF

Preston N. Carter, ISB No. 8462
Morgan D. Goodin, ISB No. 11184
Blake W. Ringer, ISB No. 11223
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]

Attorneys for Intermountain Gas Company

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY
FOR AUTHORITY TO INCREASE ITS
RATES AND CHARGES FOR NATURAL
GAS SERVICE IN THE STATE OF IDAHO
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CASE NO. INT-G-22-07

DIRECT TESTIMONY OF TAMMY J. NYGARD FOR
INTERMOUNTAIN GAS COMPANY
DECEMBER 1, 2022

PAGE 2 OF 5
T. NYGARD, DI
INTERMOUNTAIN GAS
Q. Please state your name and business address. 1
A. My name is Tammy J. Nygard and my business address is 400 North Fourth Street, 2
Bismarck, North Dakota 58501. 3
Q. By whom are you employed and in what capacity? 4
A. I am the Controller for Intermountain Gas Company (“Intermountain” or “Company”), a 5
wholly owned subsidiary company of MDU Resources Group, Inc. (“MDU Resources”). 6
I am also the Controller of Montana-Dakota Utilities Co. (“Montana-Dakota”), Cascade 7
Natural Gas Corporation (“Cascade”), and Great Plains Natural Gas Co. (“Great Plains”), 8
subsidiaries of MDU Resources. 9
Q. Please describe your duties and responsibilities with Intermountain. 10
A. I am responsible for providing leadership and management of the accounting and the 11
financial forecasting/planning functions, including the analysis and reporting of all 12
financial transactions. 13
Q. Would you please outline your educational and professional background? 14
A. I graduated from the University of Mary with a Bachelor of Science degree in 15
Accounting and Computer Information Systems. I have 20 years of experience in the 16
utility industry. During my tenure with the MDU Utilities Group (Intermountain, 17
Montana-Dakota, Cascade and Great Plains), I have held positions of increasing 18
responsibility, including Financial Analyst for Montana-Dakota, Director of Accounting 19
and Finance for Cascade, and now as MDU Utilities Group Controller. 20
Q. What is the purpose of your testimony in this proceeding? 21
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T. NYGARD, DI
INTERMOUNTAIN GAS
A. My testimony supports the Company’s overall cost of capital recommendation in this 1
case. To that end, I explain and support the Company’s recommended cost of debt, 2
capital structure, and rate of return. 3
Q. Would you please explain Exhibit No. 1? 4
A. Exhibit No. 1 shows the utility capital structure of Intermountain for the twelve months 5
ended December 31, 2021 and the projected capital structure for 2022 and 2023. Exhibit 6
No. 1 includes the associated costs of debt and common equity. The proposed capital 7
structure is calculated excluding short-term debt. This capital structure and the associated 8
costs serve as the basis for the overall rate of return requested by Intermountain in this 9
rate filing of 7.37 percent. The basis for the requested 10.3 percent return on common 10
equity contained within the overall requested rate of return is supported by the testimony 11
of Ms. Bulkley. 12
Page 1 of Exhibit No. 1 summarizes the utility capital structure and the related utility 13
costs of capital at December 31, 2021 and the projected capital structure and the related 14
utility costs of capital for 2022 and 2023. 15
Q. What is the capital structure as proposed by the Company in this rate case 16
proceeding? 17
A. As shown on Page 1 of Exhibit No. 1, the components of the 2022 and 2023 projected 18
overall annual rate of return continue to move towards a capital structure comprised of an 19
even split between long-term debt and equity. Because the two components are so close 20
to even, with equity being slightly higher, the Company proposes a capital structure with 21
50 percent debt and 50 percent equity. The proposed capital structure components, which 22
PAGE 4 OF 5
T. NYGARD, DI
INTERMOUNTAIN GAS
are used by Mr. Darrington to calculate the revenue requirement, result in the following 1
weighted cost of capital: 2
Weighted Cost of
Capital
Long Term Debt 2.22%
Common Equity 5.15%
Required Rate of Return 7.37%

Q. How does the Company finance its regulated utility operations and determine the 3
amount of common equity and debt to be included in its capital structure? 4
A. As a regulated public utility, the Company has a duty and obligation to provide safe and 5
reliable service to its customers across its service territory while prudently balancing cost 6
and risk. In order to fulfill its service obligations, the Company has made significant 7
capital expenditures for new plant investment throughout its service territory, including 8
new plant for mains, services, meters, and other support facilities. These new 9
investments also have associated operating and maintenance costs. Through its financial 10
planning process, the Company determines the amount of necessary financing required to 11
support these activities. Intermountain finances its operations targeting a 50 percent 12
common equity capital structure at year end. Capital expenditure investments are 13
financed through a mix of internally generated funds, the utilization of the Company’s 14
short-term credit line and the issuance of additional debt and common equity financing as 15
required to maintain targeted capital ratios and finance the utility operations. 16
The Company obtained $15.0 million of additional common equity in 2021. In addition, 17
the Company expects to receive approximately $5.0 million of common equity during 18
2022. 19
PAGE 5 OF 5
T. NYGARD, DI
INTERMOUNTAIN GAS
Q. What are the Company’s expected long-term debt issuances through 2023? 1
A. On June 15, 2022, the Company issued $40.0 million of long-term debt to finance its 2
capital investments. The Company is projecting to issue $25.0 million of long-term debt 3
in 2023. 4
Q. Are there other debt obligations that the Company must consider? 5
A. Yes. In addition to long-term debt, the Company’s $85 million revolving credit facility 6
was amended and extended on October 13, 2022 for $100 million. 7
Q. What does Exhibit No. 1, Pages 2-4 show? 8
A. Page 2 shows the cost and the debt balance by issue at December 31, 2021. Pages 3 and 9
4 show the projected cost and the debt balance by issue at December 31, 2022 and 10
December 31, 2023, respectively. 11
Q. How did you derive the projected cost of debt for 2022 and 2023? 12
A. The projected cost of debt for 2022 and 2023 is based upon the yield-to-maturity of each 13
debt issue outstanding. 14
Q. What does Exhibit No. 1, Page 5 show? 15
A. The schedule presents the common equity balance at December 31, 2021 and the 16
projected balance for December 31, 2022 and December 31, 2023 reflecting the projected 17
activity in the balance. 18
Q. Does this conclude your direct testimony? 19
A. Yes, it does. 20
Preston N. Carter ISB No. 8462
Morgan D. Goodin ISB No. 11184
Blake W. Ringer ISB No. 11223
Givens Pursley LLP
601 W. Bannock St.
Boise, ID 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Attorneys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF INTERMOUNTAIN GAS COMPANY.
FOR AUTHORITY TO INCREASE ITS
RATES AND CHARGES FOR NATURAL
GAS SERVICE IN THE STATE OF IDAHO
CASE NO. INT-G-22-07
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
EXHIBIT 1 TO ACCOMPANY THE
DIRECT TESTIMONY OF TAMMY J. NYGARD
Intermountain Gas Company
Proposed Capital Structure
Required
Balance Ratio Cost Return
Per Books 2021
Long-Term Debt [1] $130,000,000 41.217% 4.064% 1.68%
Common Equity [4] 185,403,576 58.783% 10.300% 6.05%
Total $315,403,576 100.000% 7.73%
Projected 2022
Long-Term Debt [2] $170,000,000 46.236% 4.210% 1.95%
Common Equity [4] 197,675,000 53.764% 10.300% 5.54%
Total $367,675,000 100.000% 7.49%
Projected 2023
Long-Term Debt [3] $195,000,000 49.890% 4.448% 2.22%
Common Equity [4] 195,859,000 50.110% 10.300% 5.16%
Total $390,859,000 100.000% 7.38%
Proposed Capital Structure
Long-Term Debt 50.000% 4.448% 2.22%
Common Equity 50.000% 10.300% 5.15%
Total 100.000% 7.37%
[1] Exhibit No. 1, page 2.
[2] Exhibit No. 1, page 3.
[3] Exhibit No. 1, page 4.
[4] Exhibit No. 1, page 5.
Case No. INT-G-22-07
T. Nygard, IGC
Exhibit No. 1
Page 1 of 5
Principal
Date of Interest Amount Annual Interest
Description Maturity Rate of Issue Expense
Unsecured Long-Term Debt
4.08% - Senior Note 10/30/25 4.080% $25,000,000 $1,020,000
4.33% - Senior Note 10/30/28 4.330% 25,000,000 1,082,500
4.00% - Senior Note 11/09/46 4.000% 30,000,000 1,200,000
3.62% - Senior Note 06/13/29 3.620% 20,000,000 724,000
3.82% - Senior Note 06/13/34 3.820% 10,000,000 382,000
4.26% - Senior Note 06/13/49 4.260% 20,000,000 852,000
Debt Amortization 22,813
Total Long-Term Debt Capital $130,000,000 $5,283,313 4.064%
Intermountain Gas Company
Long-Term Debt Capital
December 31, 2021
Case No. INT-G-22-07
T. Nygard, IGC
Exhibit No. 1
Page 2 of 5
Principal
Date of Interest Amount Annual Interest
Description Maturity Rate of Issue Expense
Unsecured Long-Term Debt
4.08% - Senior Note 10/30/25 4.080% $25,000,000 $1,020,000
4.33% - Senior Note 10/30/28 4.330% 25,000,000 1,082,500
4.00% - Senior Note 11/09/46 4.000% 30,000,000 1,200,000
3.62% - Senior Note 06/13/29 3.620% 20,000,000 724,000
3.82% - Senior Note 06/13/34 3.820% 10,000,000 382,000
4.26% - Senior Note 06/13/49 4.260% 20,000,000 852,000
4.60% - Senior Note 06/30/52 4.600% 20,000,000 920,000
4.75% - Senior Note 06/30/62 4.750% 20,000,000 950,000
Debt Amortization 27,211
Total Long-Term Debt Capital $170,000,000 $7,157,711 4.210%
Intermountain Gas Company
Long-Term Debt Capital
Projected December 31, 2022
Case No. INT-G-22-07
T. Nygard, IGC
Exhibit No. 1
Page 3 of 5
Principal
Date of Interest Amount Annual Interest
Description Maturity Rate of Issue Expense
Unsecured Long-Term Debt
4.08% - Senior Note 10/30/25 4.080% $25,000,000 $1,020,000
4.33% - Senior Note 10/30/28 4.330% 25,000,000 1,082,500
4.00% - Senior Note 11/09/46 4.000% 30,000,000 1,200,000
3.62% - Senior Note 06/13/29 3.620% 20,000,000 724,000
3.82% - Senior Note 06/13/34 3.820% 10,000,000 382,000
4.26% - Senior Note 06/13/49 4.260% 20,000,000 852,000
4.60% - Senior Note 06/30/52 4.600% 20,000,000 920,000
4.75% - Senior Note 06/30/62 4.750% 20,000,000 950,000
6.05% - Senior Note 09/30/53 6.050% 25,000,000 1,512,500
Debt Amortization 30,211
Total Long-Term Debt Capital $195,000,000 $8,673,211 4.448%
Intermountain Gas Company
Long-Term Debt Capital
Projected December 31, 2023
Case No. INT-G-22-07
T. Nygard, IGC
Exhibit No. 1
Page 4 of 5
Average Utility Common Equity
Twelve Months Ended December 31, 2021
Projected 2022-2023
Description Amount
Common Equity - 12/31/2021 $185,403,576
Common Equity - 12/31/2022 $197,675,000
Common Equity - 12/31/2023 $195,859,000
Intermountain Gas Company
Case No. INT-G-22-07
T. Nygard, IGC
Exhibit No. 1
Page 5 of 5